NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

What U.S. Data Should be Used to Measure the Price Elasticity of Demand for Alcohol?

Christopher J. Ruhm, Alison Snow Jones, William C. Kerr, Thomas K. Greenfield, Joseph V. Terza, Ravi S. Pandian, Kerry Anne McGeary

NBER Working Paper No. 17578
Issued in November 2011
NBER Program(s):   HC   HE   PE

This paper examines how estimates of the price elasticity of demand for beer vary with the choice of alcohol price series examined. Our most important finding is that the commonly used ACCRA price data are unlikely to reliably indicate alcohol demand elasticities—estimates obtained from this source vary drastically and unpredictably. As an alternative, researchers often use beer taxes to proxy for alcohol prices. While the estimated beer taxes elasticities are more stable, there are several problems with using taxes, including difficulties in accounting for cross-price effects. We believe that the most useful estimates reported in this paper are obtained using annual Uniform Product Code (UPC) “barcode” scanner data on grocery store alcohol prices. These estimates suggest relatively low demand elasticity, probably around -0.3, with evidence that the elasticities are considerably overstated in models that control for beer but not wine or spirits prices.

download in pdf format
   (285 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (285 K) or via email.

This paper was revised on August 24, 2012

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17578

Published: Ruhm, Christopher J. & Jones, Alison Snow & McGeary, Kerry Anne & Kerr, William C. & Terza, Joseph V. & Greenfield, Thomas K. & Pandian, Ravi S., 2012. "What U.S. data should be used to measure the price elasticity of demand for alcohol?," Journal of Health Economics, Elsevier, vol. 31(6), pages 851-862.

Users who downloaded this paper also downloaded these:
Saffer, Dave, and Grossman w18180 Behavioral Economics and the Demand for Alcohol: Results from the NLSY97
Dave and Kaestner w8562 Alcohol Taxes and Labor Market Outcomes
Saffer w3200 Alcohol consumption and Tax Differentials Between Beer, Wine and Spirits
Guindon, Nandi, Chaloupka, and Jha w17580 Socioeconomic Differences in the Impact of Smoking Tobacco and Alcohol Prices on Smoking in India
Markowitz, Cuellar, Conrad, and Grossman w16915 The Effects of Alcohol Policies in Reducing Entry Rates and Time Spent in Foster Care
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us